Alittle cooperation, please

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There’s no industry more wrapped up in the co-op model than hardware retailing.

How did this come to be? The expanding, building nation of previous centuries had a hardware retailer on every main street with everything going for him, except buying power to compete with the national chains.

As Godfrey Lebhar (The founding Lebhar of Lebhar-Friedman, HCN’s publishing house) wrote: the small store’s best bet to grow is “to affiliate himself with some organization, such as a voluntary chain, or a cooperative enterprise of a similar type, which will give him the benefit of the expert guidance and help he must lack as long as he plays a lone hand.”

That was written in 1962. Some things change very slowly. But in recent days, co-op news has been breaking fast.

Case in point: Home Channel News’ cover story of our Sept. 10 issue: “Extreme Makeover: Co-op Edition, Ace management promotes for-profit structure.” The story was obsolete by the time it hit readers’ mailboxes.

The reason by now is well known, as we reported at homechannelnews.com: the discovery of a $154 million accounting error has put the brakes on Ace’s efforts to remake itself as a for-profit company and abandon its cooperative structure, at least for now. On page one, senior editor Brae Canlen addresses the accounting issue with Ace CEO Ray Griffith, who expressed confidence that “we’re going to take care of this issue.”

We haven’t heard the last of the Ace accounting story. But an accounting error is not going to replace hardware retailing’s bigger story: the efforts of the independent hardware stores across the country to thrive in our increasingly competitive marketplace.

Another executive with strong ideas on the topic of co-op positioning is Lyle Heidemann, CEO of True Value.

Earlier this summer at an annual meeting of the American Hardware Manufacturers Association, Heidemann suggested Ace was more and more resembling a standardized national format, as opposed to a collection of independent businesses. Heidemann, a former Sears executive who came out of retirement to take the True Value top job, described the middle ground between the two extremes as an area of opportunity for the traditional co-op.

“I would not have come out of retirement if I did not believe there was a viable place in American business for the independent hardware store,” Heidemann said. “Because I was doing OK retired.”

Of course, Do it Best might find some room for growth in that realm, too. ( See story, page 3 )

It’s important to note, as the co-ops fine tune their programs and reposition themselves in practice and in theory, the biggest competitors are not standing still. Home Depot’s Craig Menear made this clear in another cover story describing the company’s move to a more sophisticated merchandising philosophy. (See story, page 1)

It all adds up to one of the most exciting fall market seasons in memory.